OPINION A - The implications of the GATS with respect to basic telecommunication
services for the ITU membership

The Second World Telecommunication Policy Forum (Geneva, 1998),

conscious

a) that each Member State has the sovereign right to regulate its own telecommunication
sector, in accordance with the ITU Constitution and Convention, and to set its own
timetable for adapting to market liberalization;

b) that, in addition, ITU Member States that are also members of the World Trade
Organization (WTO) are obliged, under its General Agreement on Trade in Services (GATS),
to apply the general principle of most-favoured nation (MFN) treatment to services and
service suppliers of other WTO members except where individual exemptions were specified;

c) that WTO members which have made commitments under the agreement on basic
telecommunication services, and which entered, in part or in full, into additional
commitments contained in the WTO reference paper, undertook substantial obligations
towards liberalization of their telecommunication sector and a predictable regulatory
framework, including the operation of an independent regulatory body,

recognizing

a) that effective telecommunication networks and low-cost, high quality services are
vital to the functioning and development of modern economies, fundamental to business
activity and efficient government, and a critical enabler of the emerging world of
electronic commerce;

b) that implementation of a telecommunication sector adapted to its environment, within
a transparent and predictable regulatory framework, has the potential to provide new and
improved services and lower prices for consumers, as well as to increase investments in
this sector, from both domestic and foreign sources, and should improve the overall
business environment for telecommunication service providers and companies using their
services;

c) that the GATS provisions with respect to basic telecommunications will have an
impact on all ITU Member States and Sector Members either directly by their participation
in the agreement or indirectly through their commercial relationships with operators in
countries which have made commitments under the agreement;

d) that in addressing the challenge of narrowing the development gap, and of the
transition from traditional to new structures, account should be taken of different
national contexts,

recommends ITU Member States

to consider, where appropriate, whether application of WTO principles, notably those
contained in the Reference Paper (attached for information), either in a national
framework or by making commitments within the WTO framework, might be helpful in
benefiting their economies,

invites the ITU Secretary-General

1 to accelerate action required by Kyoto Resolution 1 and, to this effect, while
respecting ITU Members' independence of action, to cooperate with the WTO secretariat in
identifying areas of common interest, with particular emphasis on regulatory matters,
technical studies and development matters, that may foster the purposes of both
organizations, and to utilize and give a higher profile to expertise existing in the
Sectors of the Union;

2 to report to the forthcoming Council regarding progress made in this respect;

3 to prepare, in cooperation with the WTO secretariat, a draft cooperation agreement
for consideration by the Council and the 1998 Plenipotentiary Conference;

4 to take action, where appropriate, in cooperation with other international
organizations, towards facilitating informal dialogue among policy-makers and regulators
to foster adaptation to the changing environment,

invites the ITU Council

to invite WTO to take account of the urgency attached to the conclusion of a
cooperation agreement between WTO and ITU on areas of common interest.

Attachment: WTO reference paper

ATTACHMENT

WTO reference paper on basic telecommunications1

Scope

The following are definitions and principles on the regulatory framework for the basic
telecommunications services.

Definitions

Users mean service consumers and service suppliers.

Essential facilities mean facilities of a public telecommunications transport
network or service that

(a) are exclusively or predominantly provided by a single or limited number of
suppliers; and

(b) cannot feasibly be economically or technically substituted in order to provide a
service.

A major supplier is a supplier which has the ability to materially affect the terms
of participation (having regard to price and supply) in the relevant market for basic
telecommunications services as a result of:

(a) control over essential facilities; or

(b) use of its position in the market.

1 Competitive safeguards

1.1 Prevention of anti-competitive practices in telecommunications

Appropriate measures shall be maintained for the purpose of preventing suppliers who,
alone or together, are a major supplier from engaging in or continuing anti-competitive
practices.

1.2 Safeguards

The anti-competitive practices referred to above shall include in particular:

(a) engaging in anti-competitive cross-subsidization;

(b) using information obtained from competitors with anti-competitive results; and

(c) not making available to other services suppliers on a timely basis technical
information about essential facilities and commercially relevant information which are
necessary for them to provide services.

2 Interconnection

2.1 This section applies to linking with suppliers providing public
telecommunications transport networks or services in order to allow the users of one
supplier to communicate with users of another supplier and to access services provided by
another supplier, where specific commitments undertaken.

2.2 Interconnection to be ensured

Interconnection with a major supplier will be ensured at any technically feasible point
in the network. Such interconnection is provided.

(a) under non-discriminatory terms, conditions (including technical standards and
specifications) and rates and of a quality no less favourable than that provided for its
own like services or for like services of non-affiliated service suppliers or for its
subsidiaries or other affiliates;

(b) in a timely fashion, on terms, conditions (including technical standards and
specifications) and cost-oriented rates that are transparent, reasonable, having regard to
economic feasibility, and sufficiently unbundled so that the supplier need not pay for
network components or facilities that it does not require for the service to be provided;
and

(c) upon request, at points in addition to the network termination points offered to
the majority of users, subject to charges that reflect the cost of construction of
necessary additional facilities.

2.3 Public availability of the procedures for interconnection negotiations

The procedures applicable for interconnection to a major supplier will be made publicly
available.

2.4 Transparency of interconnection arrangements

It is ensured that a major supplier will make publicly available either its
interconnection agreements or a reference interconnection offer.

2.5 Interconnection: dispute settlement

A service supplier requesting interconnection with a major supplier will have recourse,
either:

(a) at any time or

(b) after a reasonable period of time which has been made publicly known to an
independent domestic body, which may be a regulatory body as referred to in paragraph 5
below, to resolve disputes regarding appropriate terms, conditions and rates for
interconnection within a reasonable period of time, to the extent that these have not been
established previously.

3 Universal service

Any Member has the right to define the kind of universal service obligation it wishes
to maintain. Such obligations will not be regarded as anti-competitive per se, provided
they are administered in a transparent, non-discriminatory and competitively neutral
manner and are not more burdensome than necessary for the kind of universal service
defined by the Member.

4 Public availability of licensing criteria

Where a licence is required, the following will be made publicly available:

(a) all the licensing criteria and the period of time normally required to reach a
decision concerning an application for a licence and

(b) the terms and conditions of individual licences.

The reasons for the denial of a licence will be made known to the applicant upon
request.

5 Independent regulators

The regulatory body is separate from, and not accountable to, any supplier of basic
telecommunications services. The decisions of and the procedures used by regulators shall
be impartial with respect to all market participants.

6 Allocation and use of scarce resources

Any procedures for the allocation and use of scarce resources, including frequencies,
numbers and rights of way, will be carried out in an objective, timely, transparent and
non-discriminatory manner. The current state of allocated frequency bands will be made
publicly available, but detailed identification of frequencies allocated for specific
government uses is not required.

OPINION B - The implications of the GATS with respect to basic
telecommunications for developing countries and cooperative actions between ITU Member
States and Sector Members to facilitate adaptation to the new telecommunication
environment

The Second World Telecommunication Policy Forum (Geneva, 1998),

considering

a) the mission handed down to the Union under the ITU Constitution (Geneva, 1992), in
particular in Nos. 3, 4, 9 and 16 of Article 1;

b) that the International Telecommunication Regulations and various ITU Recommendations
constitute a framework, agreed among Member States of the Union, governing tariffs and
accounting in international telecommunications;

c) that the General Agreement on Trade in Services (GATS) and the successful conclusion
in February 1997 of the landmark agreement among 69 WTO member countries to progressively
liberalize their basic telecommunication markets confer a new status on telecommunication
services, which are now viewed by many as a tradable commodity, while still remaining a
means of delivery for other valuable services;

d) that many developing countries, which have the right under the GATS to exercise
appropriate flexibility in making market access commitments, were party to this agreement
and that the effects of the agreement will be widely felt in all countries that made
market access commitments to progressively liberalize their basic telecommunication
markets, as well as in the countries with which they trade;

e) that the application of the provisions of the GATS with respect to basic
telecommunications were agreed against a backdrop of other regulatory, technical,
commercial and financial changes sweeping the telecommunication sector;

f) that developed and developing country operators benefit from network expansion and
performance improvement in developing countries,

recognizing

a) that many countries have liberalized their telecommunication markets and that
traffic is flowing to a growing extent outside the traditional settlement arrangements;

b) that liberalization of the global telecommunication market can be expected to lead
to a lowering of settlement rates and reform of the international settlement system;

c) that the arrival of new entrants can attract new investment resources, particularly
in developing countries, subject to possible economic constraints in those markets, and
that sustainable competition can, in the medium term, lower tariffs, making
telecommunication services more accessible and less costly;

d) that the situations regarding telecommunication regulation are different from one
country to another and that their evolution will take into account each country's GATS
commitments;

e) that private stakeholding in the equity capital of incumbent operators in a number
of developing countries has in the past often been accompanied by an agreed period of
exclusivity;

f) that many administrations, particularly in developing countries, are currently
dependent on net settlement payments for a significant proportion of overall revenues to
support infrastructure development and universal service goals, and that a sudden
reduction in these resources could slow investment, in the absence of alternative sources
of financing;

noting

that the case studies in respect of the nine countries studied indicate that
termination costs and charges differ from country to country,

believing

a) that these developments in the global telecommunication marketplace will prompt
changes in policy with respect to telecommunication regulation in developing countries and
that a new, market-oriented approach to financial, policy and regulatory strategies will
serve to ease the transition from the existing situation to the new environment within
which their economies will operate;

b) that settlement rates between liberalized and non-liberalized markets will
increasingly tend to be dictated by effectively competitive markets, and that sources of
financing supplementary to settlement revenues should be sought for infrastructure
development and universal access;

c) that ITU, and in particular ITU-D, is ideally placed to assist developing countries
in managing this transition,

invites ITU Member States and Sector Members, including those in developing
countries

1 in conformity with national realities and national development goals, to continue
taking appropriate steps to ease the transition to the new telecommunication environment,
by considering the progressive liberalization of their telecommunication markets and by
encouraging private investment for instance by developing effective policies that are
transparent, non-discriminatory and competitively neutral for the funding of universal
service obligations;

2 to share experience with one another in the adaptation of national policies,
including implementation of the GATS with respect to basic telecommunication services and
of the reference paper principles and methods of ensuring that any new investment,
domestic or foreign, leads to the mutual benefit of investors, the national economy and
consumers;

3 to further develop appropriate cooperation, particularly during any transitional
period, to support developing countries in adjusting to the new trade in telecommunication
services environment by gradually implementing tariff policies with a view to reducing
dependence on revenues from accounting rates;

4 to mitigate the effects of settlement rate reform on developing countries, and in
particular on the least developed countries, inter alia by encouraging competition
for transit traffic and a substantial reduction in transit rates as a result of the
significant decrease in accounting rates;

5 to apply to transit rates the principles of transparency, non-discrimination and cost
orientation in all situations in which the transit service provider holds a dominant
position;

6 to utilize the opportunities for flexibility in scheduling commitments allowed for
under the GATS, as these relate to the conditions for the increasing participation of
developing countries,

further invites the ITU Member States and Sector Members, especially those in
developed countries

1 to facilitate the transfer of technology and manufacturing know-how in developing
countries on a partnership basis;

2 to promote cooperation among national, regional and global telecommunications
operators and service providers in a mutually beneficial relationship;

3 to seek to ensure that the growth of telecommunications is not hindered in countries
that are likely to be severely affected by the changes, and to take into consideration
difficulties that may be experienced by developing countries with a view to reducing or
eliminating their effects to the maximum extent possible;

4 to mitigate the effects of settlement rate reform on developing countries, and in
particular on the least developed countries, inter alia by encouraging competition
for transit traffic and a substantial reduction in transit rates as a result of the
significant decrease in accounting rates;

5 to apply to transit rates the principles of transparency, non-discrimination and cost
orientation in all situations in which the transit service provider holds a dominant
position;

6 to encourage telecommunication operators and service providers which are not Sector
Members to apply the above;

7 to support the development of Centres of Excellence in conformance with Council
Resolution 1111,

invites the ITU Council and the ITU Secretary-General

to take account of the concerns of developing countries and the general impact of the
GATS provisions with respect to basic telecommunications when drafting the ITU Strategic
Plan,

invites the Director of BDT, in cooperation with the Secretary-General and the other
Sectors of the Union

1 to continue and expand programmes and information seminars which outline the impact
of the GATS provisions with respect to basic telecommunications services for developing
countries and to provide those countries with practical guidance with a view to the
possible opening of their markets to competition;

2 to foster telecommunication development and reform by further facilitating the
effective collection and dissemination of data, from all sources, on a wide range of
issues, to which end it would be useful to include data with respect to levels and trends
in payments made for delivering international traffic, both terminal and transit, and
issues relating to tariff rebalancing, interconnection, rural telephony and universal
service obligations, and to support the establishment of databases and Web pages for this
purpose;

3 to encourage and facilitate partnerships for development and human resource training
and to develop, on a regional and worldwide basis, information seminars and assistance
plans relating to the implementation of principles identified in relevant ITU-D
recommendations - notably regarding transparency, investment, provision of universal
service/access, establishment of fair competition, promotion of a culture of innovation,
development of the network, and operation of an independent regulatory body - and Policy
Forum opinions; and to make use, inter alia, of the centres of excellence or other
human development centres;

4 to make every necessary effort to facilitate the transition to a fully competitive
trade in telecommunications regime, and to finalize and/or validate cost models which can
be used to assist the transitional process;

5 to develop a programme of regional seminars in collaboration, where appropriate, with
regional bodies to support Member States in operation of regulatory bodies independent
from telecommunication operators;

6 to continue the use of case studies such as those carried out in connection with this
Forum through further detailed studies, including elasticity studies, and to develop
possible models for progressively implementing cost-oriented tariffs;

7 to provide assistance to developing countries that wish to introduce analytical
accounting and a cost-oriented tariff system;

8 to assist countries most in need in this transitional period by:

 further facilitating relationships with the World Bank and other international
and regional development agencies (international organizations, non-governmental
organizations and the private sector), with a view to providing technical and financial
assistance for developing countries during a specified transitional period;

 fostering the exchange of information on methods of privatization of national
operators, promotion of private ownership and investment, and development of a
competitive, multi-carrier regulatory environment, with a view to facilitating access to
private capital markets;

9 to continue to play a key role in assisting developing countries in implementing
provisions of the GATS provisions with respect to basic telecommunications and in the
processes of data collection, analysis and solutions, noting the intention of developing
countries to make an effort to contribute constructively to their transition,

invites the World Telecommunication Development Conference (Valletta, 1998) and the
Plenipotentiary Conference (Minneapolis, 1998)

to ensure that the above actions are taken into consideration and incorporated in ITU
work programmes.

OPINION C - The evolution of the international telecommunication environment,
particularly the accounting and settlement system

The Second World Telecommunication Policy Forum (Geneva, 1998),

considering

a) the terms and spirit of the International Telecommunication Regulations (Melbourne,
1988);

b) that ITU-T Recommendation D.140 calls for the establishment of rates for the
settlement of accounts which are cost-orientated and applied in a non-discriminatory
manner,

recognizing

a) that, following the implementation of the commitments in basic telecommunications
made under the GATS, three-quarters of global outgoing international traffic is now
provided under competitive market conditions, but that many countries have not made
commitments;

b) that, given the uneven pace of market liberalization, the number of asymmetric
relations between competitive, partially competitive and non-competitive markets is likely
to increase in the short term;

c) that with increased competition in the global telecommunications market, several
methods for settling international traffic will coexist;

d) that these circumstances create additional urgency to the work of ITU-T Study Group
3 in reforming the international accounting and settlements system;

e) that each country's level of telecommunication development and cost structures is
different;

f) that ITU-T Study Group 3 has proposed transitional arrangements as an initial step
to cost-orientated rates (in the form of a proposed new Annex to Recommendation D.140) and
is also considering expanding the menu of remuneration options included in Recommendation
D.150,

noting

a) that between certain countries where competition has been introduced, rates for the
termination of international traffic are already as low as 0.05 SDR per minute;

b) that the nine case studies carried out for this Forum show a range of indicative
costs for terminating international calls, and reveal that further analysis and
verification is needed,

aware

a) that many developing countries are concerned that too rapid a reduction in
settlement rates could also lead to a reduction in settlement payments and, as a result,
would endanger or reduce their ability to meet network development targets and fulfil
universal service obligations, and that to mitigate these negative consequences,
transitional arrangements based on a country's special circumstances have been recommended
by ITU-T Study Group 3;

b) that a cost-orientated accounting rate system may be asymmetric,
i.e., with higher costs for terminating calls in some countries than others,

invites all ITU Member States and Sector Members

1 to endorse the work of ITU-T Study Group 3 in developing transitional arrangements as
an initial step towards cost-orientated rates;

2 to introduce cost-accounting mechanisms in their network operations to allow them to
establish the real costs of providing telecommunications services;

3 to work on a bilateral basis, or on a multilateral basis through the ITU, to achieve
cost-orientated accounting rates in accordance with ITU-T Recommendation D.140, noting
that this recommendation is subject to proposals for further expansion, along with
Recommendation D.150; to facilitate the achievement of this objective within a
multilaterally-agreed framework, taking account of the specific needs of the developing
countries and in particular the least developed countries;

4 to acknowledge that an increasing number of countries will be evolving to a
multi-operator environment and, notwithstanding each ITU Member State's domestic
liberalization policies, to ensure that agreements to exchange international traffic with
major suppliers can be extended to new entrants of these countries in accordance with
principles of cost-orientation and non-discrimination as defined in ITU-T Recommendation
D.140;

5 to support the results of country case studies after appropriate validation,

invites the Director of TSB, in consultation with the Chairman of Study Group 3

to establish a focus group (WTSC-96 Resolution 23) under the lead responsibility of
ITU-T Study Group 3 with the following terms of reference:

a) Membership

The focus group will be open to all participants in the work of Study Group 3,
including the chairs and members of the Regional Tariff Groups, together with all
interested members of the ITU.

b) Working methods

The focus group should, as applicable, follow the working methods and procedures for
focus groups adopted by TSAG (TSAG 1997, Report R2).

Recognizing firstly the need for urgency and secondly the already existing demands on
experts in the field of international accounting, the focus group should, to the extent
possible, work by electronic means and through the organization of Plenary Meetings
allowing optimum participation. Interpretation facilities should, as far as possible, be
provided for the Plenary Meetings of the group. The TSB should establish an E-mail
reflector for the use of the group. Contributions may also be made directly in
correspondence to the Chairman of the group.

The progress and output of the focus group should be available via an appropriate
Website. Where resources are earmarked for collection of cost information in a given
tariff region, and if the tariff group of this region is in the process of gathering that
information, these resources would be used to support the actions of the tariff group.

c) Time-scales

The focus group should be established and begin work immediately.

It is recommended that the final report should be submitted to the Director of the TSB
by 6 November 1998 with an interim report to the June 1998 Study Group 3 meeting
where the formation of the focus group will be approved. In addition, the final report is
to be submitted as a normal contribution to the December 1998 meeting of Study Group 3 for
consideration.

d) Objectives and activities

Given that, in many Member States of the Union, the necessary infrastructure does not
exist to enable the determining of cost orientation, and pending the development of
methodologies for determining the cost orientation of settlement rates (or equivalent),
the objective of the focus group will be to facilitate the progress of Study Group 3 at
its June and December meetings through a work programme, preferably to be carried out in
three steps:

i) The nine case studies presented to the Second World Telecommunication Policy Forum
together with any subsequent case studies.

ii) Existing analyses of market trends and statistical studies/data including, the
results of the Regional Tariff Groups and cost elements, the report of the 7th Regulatory
Colloquium, the schedules of reductions submitted in response to the ITU-T Questionnaire,
and other relevant reports.

iii) The development of proposals for solutions for transitional arrangements towards
cost orientation beyond 1998, including ranges of indicative target rates, taking into
account i) and ii).

The focus group should also take account of the Agenda, Report and Opinions of the
Second World Telecommunication Policy Forum,

invites the Director of BDT

1 to respond positively to requests from developing countries for assistance in
developing cost-accounting systems for telecommunication services;

2 to support the focus group in particular by:

 facilitating the participation of representatives of developing countries,
particularly the least developed countries, by the provision of fellowships and the
provision of equipment to enable electronic means of working;

 making available all studies and data related to the work of the focus group,

invites the ITU Council

recognizing the urgency of the matter, to provide the necessary resources to all
Sectors of the Union for the group to meet in a way so as to produce its report to the
Director of TSB and ITU-T Study Group 3 in time.